Gold held steady below a 16-1/4-year high in Asia on Wednesday, with some investors shrugging off a weak dollar to cash in their holdings. Dealers reported steady trade in gold bars and scraps in parts of Asia, while fresh demand from jewellery manufacturers and investors was expected to emerge at around $440 an ounce.
Gold, used as investment and jewellery, has risen around 20 percent since falling to this year's low of $371 an ounce in May. Spot gold was at $447.25/448.00, versus $447.55/448.30 an ounce last quoted in New York on Tuesday.
The yellow metal hit a 16-1/4-year high at $449.50 in London. Dealers pegged the next resistance at $450 an ounce, a level lasts seen in June 1988, but profit taking was likely to limit gains.
The New York market is expected to see more position squaring before the US Thanksgiving holiday on Thursday and Friday. "I would expect to see a trading range of $445 to $450 in the next few days but I don't think are going to test the resistance this week because of the holiday in the US," said a dealer in Hong Kong.
Tokyo gold futures gained but offered limited support for the spot market. The benchmark October gold contract rose five yen per gram to 1,492 yen.
The dollar traded just above a record low against the euro on Wednesday, hit by news that Russia may consider boosting the share of euros in its $100 billion-plus foreign currency reserves and a rebound in oil prices.
The dollar stood around $1.3090 per euro, slightly lower that late US levels and within sight of a record low of $1.3108.
Dealers said the bullion market would keep an eye on possible sales by European central banks after the president of the Bundesbank, Germany's central bank, said on Monday it aimed to decide before the end of the year if it would use an option to sell gold under a current agreement.
The agreement, which came into force at the end of September, raised the limit on gold sales by the pact's 15 signatories over the next five years to 2,500 tonnes from 2,000 tonnes in 1999-2004.
N M Rothschild said in a report that sales of 500 tonnes of gold a year had the same effect as increasing mine production by 20 percent, adding that global mine output stood at 2,593 tonnes in 2003.
Over the past five years, the report said, European central banks' sales had been partially offset by producer de-hedging, estimated at 291 tonnes in 2003, which was unlikely to continue at its current pace.
"Whilst investor demand is currently accounting for the difference between total supply and demand, the question remains how long can this continue. We all know how fickle investors are," the report said.
In other precious metals, platinum rose to $862/867 an ounce from $851/855 late in New York, aided by gains in Tokyo platinum futures. Sister metal palladium was at $212/217 an ounce, against $213/219.
Silver was at $7.54/7.56 an ounce, versus $7.53/7.56 in New York.